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Thursday, April 20, 2017

Todd Royal — Geopolitics is becoming the main driver of global oil prices

The first summit earlier this month between US President Donald Trump and his Chinese counterpart, Xi Jinping, focused on the North Korean nuclear threat and trade accords between the two global superpowers. The impact of the two-day meeting will also affect fossil-fuel and related energy policy for Asia and the world more than any action by Opec or the prices set by major oil producers.

China is now the largest buyer of US oil exports, accordingto Bloomberg. And since Beijing has blocked North Korean coal imports to sanction Pyongyang for its nuclear and ballistic missile programs, China is buying US coal instead. The coal blockade indirectly helps Trump fulfill a continued pledge of “putting US coal miners back to work.” China’s economy is still dependent on the country’s coal-fired power plants, and the move to buy more US coal in support of UN sanctions against North Korea illustrates how geopolitics will drive energy policy....